Z Energy First-Half Profit Increases

WELLINGTON – New Zealand fuel distributor Z Energy Ltd. (ZEL.NZ) reported a 10% first-half profit rise on Thursday as it continued to reap the rewards from a 785 million New Zealand dollar (US$543) purchase of Chevron Corp.'s (CVX) gas-station network in the country.

The Wellington-based company said net profit for the six months through September rose to NZ$80 million from NZ$73 million a year ago.

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On a replacement cost basis--which strips out the effect of movements in oil prices by restating the cost of sales using the replacement cost of goods sold--Z Energy's half-year earnings before interest, tax, depreciation and fair-value adjustments totaled NZ$221 million. That was up from NZ$186 million a year ago.

Z Energy has aggressively expanded in recent years, settling a deal with Chevron for its Caltex-branded sites in June last year. The transaction added to the company's debt load and prompted directors to take a conservative approach to dividend payouts while it brought borrowings down.

Still, the company has been able to bring its debt levels down at a faster pace than originally expected, and is on track to reach a self-imposed net debt to Ebitdaf target of 2X a year ahead of a fiscal 2019 timetable.

The company said it would pay a first-half dividend of 10.4 New Zealand cents a share, up from 9.4 cents last year. It said its fiscal-year earnings guidance of between NZ$445 million and NZ$475 million was unchanged.